Dominick's parent Safeway considering selling itself

Source says talks are with Jewel-Osco parent

A former Dominick's at 255 E. Grand in Chicago. (Scott Strazzante/Chicago Tribune)

Dominick's parent Safeway said Wednesday it is in discussions to sell itself.

Reuters is reporting that Jewel-Osco parent Cerberus Capital Management LP is in talks to buy all or part of the nation's second largest grocer. That could set up an interesting evolution in the Chicago market, in which Jewel-Osco is the biggest player with 180 stores.

Cerberus was one of the buyout firms that approached Safeway last year about a possible deal, Reuters reported in October. It wasn't known if other firms are also in talks with Safeway.

The California grocer has been under tremendous pressure from investors in recent months to improve its financial results, a big factor in its decision to leave the Chicago market.

It closed all its Dominick's stores at the end of 2013. More than 40 of the 72 total Chicago locations didn't find buyers and were left vacant when they closed in December. The remainder went to competitors including Jewel-Osco, Mariano's and Whole Foods.

The company said it hasn't yet reached a deal but discussions are ongoing. It said in a news release announcing its quarterly results that it wouldn't comment further on the possible sale.

Jewel was sold to Cerberus last March as part of a $3.3 billion deal that also included the Acme and Shaw's chains and the rest of the Albertsons grocery chain. The privately held parent company, New Albertsons Inc., is based in Idaho, but operations for Jewel remain headquartered in suburban Itasca.